Fitch Ratings has affirmed its 'A-' rating on the following bonds issued on behalf of New Hampshire Catholic Charities (NHCC):

--$3,435,000 New Hampshire Higher Educational & Health Facilities Authority (NH) (New Hampshire Catholic Charities) revenue bonds series 1997.

The Rating Outlook is Stable.

SECURITY

Pledge of gross receipts and mortgage and a debt service reserve fund.

KEY RATING DRIVERS

STABLE FINANCIAL PROFILE: The affirmation is supported by NHCC's very light debt burden and consistent operating performance. Maximum annual debt service (MADS) of $551,000 remains below 1% of revenues, and NHCC has maintained solid bottom line performance with its excess margin averaging approximately 4.5% over the last four audited years. As a result, debt service coverage has been very robust and was 7.3x in fiscal 2014.

SOLID OCCUPANCY: NHCC's occupancy across its six nursing homes remains high, above 90% for the system. A renovation project at Mt. Carmel, which suppressed occupancy for a period, has been completed and occupancy is climbing back up to near 90% at that campus.

EXCELLENT LIQUIDITY: NHCC had days cash on hand of 177, a cushion ratio of 46.1x, and cash to debt of 739% at Sept. 30, 2014.

STRONG MANAGEMENT TEAM: NHCC's management team has consistently made its budget in spite of the challenging nursing home reimbursement environment. NHCC remains highly reliant on government payors, especially Medicaid, which accounts for 60% of new revenues.

RATING SENSITIVITIES

POTENTIAL DEBT ISSUANCE AND EXPANSION: NHCC is contemplating an independent living (IL) expansion at one of potentially two sites (the second site is currently being purchased) and has commissioned feasibility studies to help determine the best site on which to move forward. NHCC does have limited debt capacity at the current rating level, and a further diversity in NHCC's revenue would be a potential credit positive. The current rating does not factor in the impact of the IL expansion.

CREDIT PROFILE

New Hampshire Catholic Charities, Inc. is a not-for-profit agency that operates 439 skilled nursing beds in six separate facilities, 81 independent living rental units in three facilities, a children's home, and a home for retired priests, all of which are located throughout New Hampshire. Total operating revenue in fiscal 2012 was $59.7 million. NHCC covenants to disclose only annual information to EMMA and disclosure to date has been timely. NHCC does not covenant to disclose quarterly information.

The affirmation of the A-' rating and Stable Outlook are supported by NHCC's solid occupancy, consistent bottom line results, a solid balance sheet, and very light debt burden. Occupancy across NHCC's six nursing homes was above 90% through the six-month interim period, which is consistent with occupancy over the last five audited years.

Credit concerns include NHCC's lack of revenue diversity (approximately 75% of NHCC's patient revenue comes from government sources) and the potential for future capital projects. NHCC's high exposure to government payors adds operating risk, which NHCC has managed well even as New Hampshire (GOs rated 'AA+' by Fitch) like many other states is facing financial pressures. However, Fitch notes positively New Hampshire's rescinding of prior Medicaid cuts, which has helped improve NHCC's daily Medicaid rate by approximately $20 since 2012.

STABLE OPERATING PROFILE

Solid and consistent occupancy continues to support positive bottom line results, with NHCC's excess margin averaging 4.5% over the last four audited years. NHCC management remains focused on occupancy and occupancy has remained strong even at some of NHCC's more challenging campuses. NHCC continues to tighten its relationships with the hospitals in its various markets in order to strengthen referrals for short term rehabilitation referrals.

The financial results also reflect NHCC's solid expense control efforts and a stable and manageable level of Medicaid exposure, approximately 60%. Medicaid levels that exceed 70% are a credit concern as Medicaid is the lowest payor of all reimbursement sources. In addition, fundraising, which is an integral part of NHCC's revenue stream, has remained steady. Six month interim results show continued positive results with an excess margin of 9.9%.

FUTURE CAPIAL PLANS

In recognition of its need to diversify revenue, NHCC has been contemplating building independent living units (IL). NHCC currently has 81 rental IL units in three locations but these produce very modest levels of revenue (approximately $1.2 million a year) and are immaterial to NHCC's overall financial results.

The IL expansion would most likely occur on NHCC's St. Francis campus or at a new site. NHCC is the final stages of purchasing a skilled nursing facility in Windham, NH. The final purchase price is expected to be approximately $2.8 million and final approval from the state is expected to occur within the next few months.

Management reports that the Windham campus, while currently a mix of skilled nursing and AL units, has space for a potential IL expansion. St. Francis in Laconia is also well-situated for an IL expansion as it is located next to a lake. NHCC is undertaking a feasibility study to determine its next steps and the final project would likely include additional debt. Fitch will factor the projects into the rating as clarity emerges on the scope and cost of capital plans.

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Related Research:

--Rating Guidelines for Nonprofit Continuing Care Retirement Communities, July 24, 2014;

--Nonprofit Nursing Home Rating Criteria, Oct. 3, 2014.

Applicable Criteria and Related Research:

Not-for-Profit Continuing Care Retirement Communities Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=752470

Nonprofit Nursing Home Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=782388

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=974635

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